Category Archives: Rental Property

residential rehab budget

Four big ticket repairs killing your property rehab budget

Property Rehab Budget

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So you’ve found a 3-2-2 in a trendy area with a good school zone. Now you want to know how

much to offer. The only way to figure that out is by estimating the repair cost. Learn how to estimate big ticket items when preparing your property rehab budget.

Number 1: Does it need a roof?

This is an easy answer. Weathered or broken shingles and decking is fairly easy to spot from on the ground. Where costs inflate is the number of pitches and angles in the roof, and not the total area to replace. There are factors which bloat the cost of repair, such as cedar shake decking, because it’s labor intensive, outdated, and a fire hazard. A good inspection should help you determine the presence of cedar shake.

Number 2: Is there foundation damage?

Diagonal cracks near windows and doorways are a prime tell of foundation problems. Large cracks and uneven concrete in the driveway is another tell. Slab foundations require breaking into the concrete and inserting piers to raise uneven portions of the house. Luckily, most foundation companies offer transferable, lifetime warranties.

Number 3: Cast Iron or Clay pipes?

Homes built before 1979 are at risk for cast iron or clay pipes, and lead paint. Cast iron rots and clogs over time. If you have foundation damage, you can almost guarantee those cast iron pipes have broken. Clay pipes just dissolve and are susceptible to root penetration. When that happens, your sewage quickly backs up. Fresh paint or new dry wall will often satisfy housing requirement codes if you’re looking to rent.

Number 4: H-Vac and Water Heater.

Water heaters more than 10 years old are at greater risk of giving out. So while it might not be an immediate priority, know it might be an issue in 2-3 years. H-Vac systems now-a-days are a godsend, but that doesn’t mean they’re any less expensive than a roof or plumbing. If they’ve not been updated since Obama first took office, or if the previous occupant didn’t know what filters were, that’s another item that needs fixing.

Understanding the need for these costly repairs is essential for your property rehab budget.  Don’t be surprised.  Be prepared.
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older plumbing

Older plumbing risks in Dallas-Fort Worth

Older Plumbing Risks of Cast Iron and Clay Pipes 

Older plumbing is DFW can be a buried time bomb waiting to explode.  Normal home inspections will not uncover the risks.   They say the best mistakes to learn from are someone Else’s. I will give you two examples of when ignorance cost me thousands.  You can avoid the mobile apprisk of buying and older home in DFW.

Home Construction Background

In the early 1970’s builder switched from building homes on pier and beam and went to slab on grade.  That meant water and sewage pipes became integrated into the foundation.  No big deal right?  Wrong.  The materials of construction for pipes used at the time were either cast iron or clay.  Herein lies the problem.

 Cast Iron Rusts

My husband says water eats cast iron like Baptist eat chicken at a church social.  Given enough time, everything will be consumed.  We bought an investment property with some foundation damage.  The deviation did not appear to be a big problem and not too expensive to repair.   The home inspection revealed no plumbing problem.  However when the foundation was brought back to level, the cast iron in the foundation cracked.  The water created a weak spot in the plumbing which gave when exposed to the stress of leveling the house.  That meant digging into the foundation in the bathroom and repairing the leak.  Can you say use up your contingency money?

 Clay Pipes Decompose

A couple of months later we purchased another property.  In addition to the inspection, we ensured there was no cast iron.  We pressured tested the plumbing as well.  We brought the property into service condition.  Part of renovation involved installing a new tile floor.  Everything was great.  Tenants moved in and were happy, until the sewage started backing up into the bath tub. It seems that roots in the front yard had made their way deep into the clay system.  They were thin enough to allow water to flow during the home inspection and pass the pressure test (the roots were actually holding the system together).  Well when the toilet system was used as normal, paper and other material would get caught in the roots and clog.  The remedy was to tear out the plumbing from the city tap, across the lawn, rip up the new tile floor and into the bathroom.  The clay literally fell to pieces when the plumbers tried to lift it out.

Home Buying Solution

All Real Estate agents are not created equal.  There is much more to knowing the neighborhoods than just the school system and the location of the nearest hospital.    Some problems are buried deep and are not revealed by a routine home inspection.  In my particular instances, neighborhoods in West Tarrant County were constructed by builders who used cast iron.  Builders in East Tarrant County were using clay pipes at the same time.  Knowing where these issues are and how to detect them is huge when making a purchase decision. Most can be overcome but you have to know how to deal with them.

 Call Me or an Expert in Your Area

When you interview your prospective Real Estate Agent, make sure you do some digging on your own to ensure they really know the neighborhoods.  Renovating old houses can be fun and rewarding.  Many people want to be like Chip and Joanna Gaines in “Fixer Upper.”  Understand renovation is more than paint and kitchen remodels.  

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house rehab

House Rehab Budget will make your project successful

Create a house rehab budget

Rehab budgets are critical to your success.  At the end of the day the two biggest factors which determine your profit for rental houses are the price you paid per square foot and the price you charge in rent per square foot.
Your cost doesn’t just stop at the purchase of a house but continues on into your rehab budget. In order to obtain a larger Return on Investment,  You either need a larger rent or a smaller rehab budget.   This video we’ll examine a few basic ways you can create and control your rehab budget.
If you haven’t already watched our video on estimating the repairs of big-ticket items, please do that now.

Number one – Control the materials

Contractors are businessmen to they need to find many ways of making a profit.
One such way is including the cost of materials in their quote.  Make sure you ask for quotes that involve labor only and materials decide whether or not it’s  cost-effective to buy items like paint fixtures orr let your contractor do it.

Number two – Maintain the schedule

If you’re acting as your own General Contractor,  then it’s your job to not only make sure the work is done but that is done on time.  Foundation repairs need to sit for a week before you do more work.  The ceiling fixtures go on after paint and paint happens after the floors are installed.  Knowing when contractors need to work in order is key.
Remember hiring one contractor for many jobs can cause your project to run longer.  It’s important to delegate.
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Number three – Know your limit

You might save $1,500 by painting the house yourself but will you save time and a headache? My rule of thumb is that it’s easier and more cost effective to demolition than it is to rebuild. Taking down a fence clearing out clutter and ripping up carpet doesn’t take skill and can be done in a matter of hours.  installing tile and back-splash, painting walls and hanging doors takes patience and precision acquired over years of practice.  Sometimes hiring outside help is the difference between collecting rent next month instead of two months from now.
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single family residence

How to select a single family residence investment property

Selecting the right single family residence investment property

This video contains criteria I use in selecting single family residence investment property.  You need to know your target client before you can even begin selecting a property to purchase.

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